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Trading Outlook for Equity Indices After Monday’s Surge; Crude Oil Nearing Support

Trading Outlook for Equity Indices After Monday’s Surge; Crude Oil Nearing Support

Paul Robinson,

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In this webinar, we took a look at the big ‘risk-on’ theme which gripped markets on Monday following the French election. The CAC 40 is well above the trend-line extending down from the 2000 record highs, but could use some time to digest before attempting to move higher. Keep in mind, still a lot of election risk with the run-off election between Macron and Le Pen coming up on May 7. The DAX blasted off to record highs and looks good on a shallow pullback to support under 12400. The FTSE 100 rallied sharply from support surrounding 7100 to resistance in the vicinity of 7255/300; can it break on through?

The S&P 500 may have ended its correction, but we still want to see it trade above 2378 first. The Nasdaq 100 is the leader in the U.S. and suggests the S&P and Dow will both move to new heights.

Crude oil is dropping towards a familiar trend-line which gave it good support last month. We will be watching to see how it reacts should it firmly test the trend-line; it may create an opportunity to catch a bounce. A nice key reversal bar off the t-line would provide good signaling it wants to turn higher.

Gold is rolling over from the 2011 trend-line despite USD weakness; silver is looking even unhealthier right now. Both precious metals have trend-line support below, but not sure they will make it to those levels if the US Dollar Index (DXY) is on the verge of a big breakdown. The DXY isn’t positioned very well, and may be on the cusp of a sizable drop. If this is the case, then gold and silver should start to perk up again. But, until we see gold overcome the 2011 trend-line it is hard to be a bull on precious metals no matter what the dollar is doing.

Copper is still pointed lower intermediately speaking, but could be in the process of carving out a bullish pattern which could send it higher at a later time. We’ll need to wait for further developments before drawing any concrete conclusions.

Looking for trading ideas? See our quarterly forecasts for FX, equity indices, and commodities.

---Written by Paul Robinson, Market Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.